Moorthi Devi And Ors. vs Pawan Kumar And Ors.
2011 Latest Caselaw 3948 Del

                                     UNREPORTED
*   IN THE HIGH COURT OF DELHI AT NEW DELHI


+                 FAO 531/1999


MOORTHI DEVI AND ORS.                        ..... Appellants
                 Through:             Mr. O.P. Mannie, Advocate


                  versus


PAWAN KUMAR AND ORS.                          ..... Respondents
                Through:              Ms. Manjusha Wadhwa and
                                      Ms. Angana Goswami,
                                      Advocates for the respondent
                                      No.3

%                          Date of Decision :   August 16, 2011

CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL

1. Whether reporters of local papers may be allowed
   to see the judgment?
2. To be referred to the Reporter or not?
3. Whether judgment should be reported in Digest?

                           J U D G M E N T (ORAL)

: REVA KHETRAPAL, J.

1. The appellants in this appeal seek to assail the judgment and

award of the learned Motor Accidents Claims Tribunal dated 19th

August, 1999 passed in Suit No.236/1998, whereby a sum of `

2,43,184/- was awarded in favour of the appellants alongwith interest

thereon at the rate of 9% per annum from the date of the filing of the

petition, that is, 15.01.1990 till realisation.

2. The facts briefly delineated are that on 15.12.1989 at about

6.00 p.m., the deceased Dharambir Singh was going on foot and when

he reached at Wazirabad Road, near Khajuri Chowk, Delhi, he was

hit by truck No.DIL-4847, which was being driven rashly and

negligently and at a high speed by its driver Pawan Kumar. As a

result of the forceful impact, the deceased fell down on the road and

sustained injuries, which resulted in his death at the spot. A Claim

Petition under Section 166 of the Motor Vehicles Act, 1988 was filed

by the appellants on 15.01.1990 claiming compensation in the sum of

` 5 lakhs against the driver, the owner and the insurer of the

offending truck, which culminated in the passing of the impugned

award on 19.08.1999. Aggrieved therefrom, the present appeal has

been preferred by the appellants, wherein the manner of computation

of the award amount has been faulted as also the fact that the learned

Tribunal exonerated the Insurance Company and held that it was not

liable to pay any compensation to the appellants.

3. At the outset, it may be stated that the present appeal was

decided by this Court on 01.07.2008, but subsequently on an

application filed by the Insurance Company for recalling of the order

dated 01.07.2008 on the ground that the appeal had been decided in

the absence of the counsel for the Insurance Company, and the

concerned officers of the applicant-Insurance Company had derived

the knowledge about the judgment dated 01.07.2008 through the

internet on 17.10.2009, and thereby prejudice had been caused to the

interest of the applicant-Insurance Company, the order dated

01.07.2008 was recalled on 15.07.2010.

4. It is in the aforesaid circumstances that the matter has been

heard again by this Court and Mr. O.P. Mannie, the learned counsel

for the appellants and Ms. Manjusha Wadhwa, the learned counsel for

the Insurance Company, have addressed arguments. The learned

counsel for the appellants has challenged the judgment of the learned

Tribunal while the learned counsel for the Insurance Company has

assailed the findings rendered by this Court in the absence of the

counsel for the Insurance Company.

5. A two-fold challenge has been raised by Mr. Mannie, the

learned counsel for the appellants, in support of his case that the

impugned award deserves to be set aside. The first ground of

challenge of Mr. Mannie is with regard to the finding of the learned

Tribunal absolving the Insurance Company from its liability to pay

compensation to the appellants. His second ground relates to the

manner of computation of the award amount by the learned Tribunal.

It is proposed to deal first with the contention of Mr. Mannie that the

Insurance Company should not have been absolved of its liability to

pay compensation to the appellants.

6. In the aforesaid context, relying upon the testimony of RW1

Babu Lal, the Assistant Administrative Officer of the Insurance

Company and Section 64-VB of the Insurance Act, 1938, the learned

Tribunal arrived at the following conclusion:

"I have gone through the statement of this witness and I have also gone through the cross- examination of this witness and in the statement made by this witness, he has categorically stated that the premium of insurance was deposited by the insured with the insurance company on 30.3.90 against the cover note which covered the period from 30.11.89 to 29.12.89. It has also come on record that the accident took place on 15.12.89 which means the premium was paid by the insured much after the accident i.e. about three months after the accident. I have also gone through the Section 64 VB in the Insurance Act 1938 it reads as under:-

"No risk to be assumed unless premium is received in advance.- (1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner.

(2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.

Explanation. - Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on

the date on which the money order is booked or the cheque is posted, as the case may be.

(3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent. (4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or despatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty four hours of the collections excluding bank and postal holidays.

(5) The Central Government may, by rules, relax the requirements of sub section (1) in respect of particular categories in insurance policies."

After going through the Section 64VB of the Insurance Act, I have come to the conclusion that unless the payment of insurance premium is made in advance by the insured to the insurer the risk for the accident which has occurred at earlier (sic.) will not be covered in that policy and the insurance company will not be liable to pay any compensation for any such accident. In the present case also, the premium was paid after 3½ months of the accident by the insured to the insurer. It appears that the

insured had mixed up with the agent of the insurance company (sic.) and in connivance with the agent he got this policy issued which cover the period of accident but the payment of insurance premium was paid after 3½ months after the accident. Such a cover note issued by the agent is avoid-ab-initio (sic.) as per section 64 VB of the Insurance Act. Since the insured knew fully well that his vehicle had met with an accident and he deliberately paid the premium after 3½ months to the agent of the Insurance Company intending to do harm to the Insurance Company in such a case only the insured will be liable to pay the compensation for the accident which was caused by his vehicle to the petitioners. I, therefore, hold that the respondent No.3 insurance company is not liable to pay any compensation to the petitioners. I, further hold and I direct the Chairman of the Insurance Company to hold an enquiry into this case and fixed the liability for having issued the cover note which covered the accident 3½ months prior to the payment of the insurance premium. I also recommend that suitable action should be taken against the erroring (sic.) agent and I further direct that a criminal case under the law be got registered against the agent who get issued such a cover note by playing fraud on Insurance Company. I further direct that even the owner of the vehicle who in connivance with the agent have played fraud with the company be also booked under the criminal case for having played fraud upon the insurance company."

7. It may be mentioned that the aforesaid findings of the Tribunal

were reversed by my learned predecessor in his judgment dated

01.07.2008 by issuance of a direction that the total compensation as

enhanced would be paid to the appellants by the respondent-

Insurance Company. However, in view of the fact that the Insurance

Company was not represented through counsel, this matter was not

dwelt upon any further. Before this Court, Ms. Manjusha Wadha, the

learned counsel for the Insurance Company, has relied upon the

decision rendered by the Supreme Court in Deddappa and Others vs.

Branch Manager, National Insurance Company Limited, I (2008)

ACC 1 (SC). The learned counsel for the appellants, on the other

hand, has relied upon a three-Judge Bench decision of the Supreme

Court in Oriental Insurance Co. Ltd. vs. Inderjit Kaur and Others

reported in I (1998) ACC 1 (SC) as well as the decision rendered by

the Supreme Court in the case of National Insurance Co. Ltd. vs.

Abhaysing Pratapsing Waghela and Others, 2008 ACJ 2697.

8. Before adverting to the aforesaid decisions of the Supreme

Court, it is proposed first to refer to certain factual aspects of the

matter. It is not in dispute that the road accident in which Dharambir

Singh lost his life took place on 15.12.1989. It is also not in dispute

that by a cover note bearing No.788876, the truck in question bearing

No.DIL-4847 was insured for the period 30.11.1989 to 29.12.1989. It

is the case of the Insurance Company that the premium which was

required to be paid in advance at the time of the commencement of

the risk was paid only on 30th March, 1990 and in view of this

violation of Section 64-VB of the Insurance Act, the policy of

insurance was not issued in lieu of the aforesaid cover note and,

therefore, the Insurance Company is not liable to pay any

compensation.

9. The aforesaid case of the Insurance Company, as stated above,

is sought to be proved and established through the testimony of RW1

Babu Lal, the Assistant Administrative Officer of the Insurance

Company. In his testimony, RW1 deposed that he had received a

certified copy of the entries of the premium register, contained in the

register, encircled 'A' from the Gauhati Branch, copy whereof was

Ex.RW1/1. He further deposed that according to this document, the

premium was deposited on 30.03.1990 vide cover note No.788876,

covering the period 30.11.1989 to 29.12.1989, in the name of P.

Chand against the vehicle No.PIL-4847 (? DIL-4847). In the course

of his cross-examination, the witness, who, in his examination-in-

chief, had stated that the cover note was in the name of P. Chand,

stated that the cover note had been issued in the name of Shri Om

Parkash (the owner of the offending truck), but again stated it was

issued in the name of Gir Prakash. In further cross-examination, he

admitted that he had never worked in the Gauhati office of the

company, that he did not know the name of the person who had

prepared the statement (Ex.RW1/1) and that he could not even

identify his signature.

10. It is clear from the aforesaid testimony of RW1 that the original

register containing the premium entries was not produced before the

learned Tribunal. What was produced was a certified copy of the

statement signed by some officer of the company in Gauhati whose

name RW1 did not know and whose signature RW1 could not

identify. Interestingly also, the name of the person in whose name the

cover note was issued was initially given by the witness as P. Chand

in the examination-in-chief and thereafter in cross-examination as Om

Parkash and again as Gir Prakash. The testimony of RW1, in my

opinion, therefore, does not inspire confidence, but even assuming the

same to be gospel truth, in my view, the Insurance Company cannot

be absolved of its liability to pay compensation to the appellants in

the instant case. I say so on the basis of a bare reading of Section

147(5) and Section 149 (1) of the Motor Vehicles Act, 1988. Sub-

section 5 of Section 147, which begins with a non-obstante clause,

reads thus:

"Notwithstanding anything contained in any law, for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."

Section 149 (1) is as follows:

Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks.- (1) If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by

whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause

(b) of sub-section (1) of Section 147 (being a liability covered by the terms of the policy) or under the provisions of section 163A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments."

11. The contention of Mr. Mannie is that in view of the non-

obstante clause contained in Section 147(5) of the Motor Vehicles

Act, 1988, Section 64-VB of the Insurance Act has no relevance. I

am in agreement with the aforesaid contention and am of the view

that by virtue of the provisions of Section 147(5) of the Act, the

Insurance Company cannot avoid its liability unless and until it pleads

as well as proves one of the defences which it is entitled to take under

Section 149 of the Act. No such defence having been raised in the

instant case, it is difficult to hold that Section 64-VB of the Insurance

Act has any relevance or that it can in any manner help the insurer in

avoiding its liability.

12. It may be noted that the aforesaid provision of the Insurance

Act, viz., Section 64-VB was dealt with by the Supreme Court in the

case of Inderjit Kaur (supra). In the said case, a bus had met with an

accident. Its policy of insurance was issued by the insurer on

30.11.1989. The premium for the policy was paid by cheque, which

cheque was dishonoured. A letter stating that it had been dishonoured

was sent by the insurer to the insured on 23.01.1990. Subsequently,

the premium was paid in cash on 02.05.1990. In the meantime, on

09.04.1990, the accident took place, the bus collided with the truck,

whose driver died. The truck driver's widow and minor sons filed the

claim petition. The Insurance Company denied the claim asserting

that under the terms of Section 64VB of the Insurance Act, 1938, no

risk was assumed by an insurer unless the premium thereon had been

received in advance. The Motor Accidents Claims Tribunal rejected

the contention of the Insurance Company. The appeal filed by the

Insurance Company before the High Court of Punjab and Haryana

was summarily dismissed and it is this order which was challenged

before the Supreme Court. Dismissing the appeal, a three-Judge

Bench of the Supreme Court held as follows:

"6. Chapter 11 of the Motor Vehicle Act, 1988, provides for the insurance of motor vehicles against third party risks. Section 146 thereunder states that no person shall use or cause or allow any other person to use a motor vehicle in a public place unless there is in force in relation to the use of the vehicle a policy of insurance that complies with the requirements of the Chapter. Section 147 sets out the requirements of policies and the limits of liability. A policy of insurance, by reason of this provision, must be a policy which is issued by a person who is an authorised insurer. Sub- section 5 reads thus :

"(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."

Section 149 refers to the duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. Sub- section (1) thereof reads thus :

"(1) If, after a certificate of insurance has been issued Under Sub-Section (3) of

Section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under Clause (b) of Sub-section (1) of Section 147 (being a liability covered by the terms of the policy) [or under the provisions of Section 163A] is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments."

7. We have, therefore, this position. Despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorised insurer, issued a policy of insurance to cover the bus without receiving the premium therefor. By reason of the provisions of Section 147(5) and 149(1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel

the policy for the reason that the cheque issued in payment of the premium thereon had not been honoured.

8. The policy of insurance that the appellant issued was a representation upon which the authorities and third parties were entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not receive the premium. Its remedies in this behalf lay against the insured.

9. ...............................................

10. It must also be noted that it was the appellant itself who was responsible for its predicament. It had issued the policy of insurance upon receipt only of a cheque towards the premium in contravention of the provisions of Section 64-VB of the Insurance Act. The public interest that a policy of insurance serves must, clearly, prevail over the interest of the appellant."

13. In a subsequent decision rendered by the Supreme Court in

New India Assurance Co. Ltd. vs. Rula and Ors., II (2000) ACC

751, it was held that ordinarily a liability under the contract of

insurance would arise only on payment of premium, if such payment

was made a condition precedent for taking effect of the insurance

policy, but such a condition which is intended for the benefit of the

insurer can be waived by it. It was further held that if, on the date of

accident, there was a policy of insurance in respect of the vehicle in

question, the owner of the vehicle would have to be indemnified qua

any claim made by a third party against the Insurance Company.

Subsequent cancellation of the insurance policy on the ground of non-

payment of premium would not affect the rights already accrued in

favour of the third party.

14. In National Insurance Co. Ltd. vs. Seema Malhotra and Ors.,

I (2001) ACC 317 (SC), the Supreme Court, after referring to its

earlier decisions in Inderjit Kaur (supra) and Rula (supra), took a

somewhat different view. In the said case, it was held:

"17. In a contract of insurance when the insured gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque, on presentation, would yield the amount in cash. It cannot be forgotten that a cheque is a bill of exchange drawn on a specified banker. A bill of exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain person. It involves a promise that such money would be paid.

18. Thus, when the insured fails to pay the premium promised, or when the cheque issued

by him towards the premium is returned dishonoured by the bank concerned the insurer need not perform his part of the promise. The corollary is that the insured cannot claim performance from the insurer in such a situation.

19. Under Section 25 of the Indian Contract Act, 1872 an agreement made without consideration is void. Section 65 of the Indian Contract Act, 1872 says that when a contract becomes void any person who has received any advantage under such contract is bound to restore it to the person from whom he received it. So, even if the insurer has disbursed the amount covered by the policy to the insured before the cheque was returned dishonoured, the insurer is entitled to get the money back.

20. However, if the insured makes up the premium even after the cheque was dishonoured but before the date of accident it would be a different case as payment of consideration can be treated as paid in the order in which the nature of transaction required it. As such an event did not happen in this case, the Insurance Company is legally justified in refusing to pay the amount claimed by the respondents."

15. In Deddappa's case (supra), which is heavily relied upon by

the learned counsel for the Insurance Company, the Supreme Court

observed that though it was not oblivious of the distinction between

the statutory liability of the Insurance Company vis-à-vis a third party

in the context of Sections 147 and 149 of the Motor Vehicles Act,

1988 and its liabilities in other cases, but the said liabilities arising

under a contract would have to be met if the contract is valid. It,

however, observed:

"If the contract of insurance has been cancelled and all concerned have been intimated thereabout, we are of the opinion, the insurance company would not be liable to satisfy the claim."

It further observed:

"A beneficial legislation as is well known should not be construed in such a manner so as to bring within its ambit a benefit which was not contemplated by the legislature to be given to the party."

16. In the case of Abhaysing Pratapsing Waghela (supra), the

same learned Judge of the Supreme Court who rendered the decision

in Deddappa's case (supra) considered the question of what would be

the effect of dishonour of a cheque when subsequently the amount of

premium had been accepted in cash by the insurer. Strong reliance

was placed by the Insurance Company in the said case on the decision

rendered in Deddappa's case (supra). The Court, however, held that

it was unable to endorse the contention of the learned counsel for the

Insurance Company and observed:

"16. Indisputably, the first respondent is a third party in relation to the contract of insurance which had been entered into by and between the appellant and the owner of the vehicle in question. We have noticed hereinbefore that a document was produced before the Tribunal. Even according to the appellant, although it was only a Motor Input Advice-cum-Receipt, it contained the cover note No. 279106. We, therefore, have to suppose that a cover note had, in fact, been issued. If a cover note had been issued which in terms of clause (b) of section 145 of the Act would come within the purview of definition of certificate of insurance; it also would come within the purview of the definition of a insurance policy. If a cover note is issued, it remains valid till it is cancelled. Indisputably, the insurance policy was cancelled only after the accident took place. A finding of fact, therefore, has been arrived at that prior to the deposit of the premium of insurance in cash by the owner of the vehicle, the cover note was not cancelled.

17. It is in the aforementioned situation, we are of the opinion, that the judgment of the High Court cannot be faulted. No doubt, a contract of insurance is to be governed by the terms thereof, but a distinction must be borne in mind between a contract of insurance which has been entered into for the purpose of giving effect to the object and purport of the statute and one which provides for reimbursement of

the liability of the owner of the vehicle strictly in terms thereof. In that limited sense, a contract of insurance entered into for the purpose of covering a third party risk would not be purely contractual. We may place on record that an ordinary contract of insurance does not have a statutory flavour. The Act merely imposes an obligation on the part of the insurance company to reimburse the claimant both in terms of the Act as also the Contract. So far as the liability of the insurance company which comes within the purview of sections 146 and 147 is concerned, the same subserves a constitutional goal, namely, social justice. A contract of insurance covering the third party risk must, therefore, be viewed differently vis-a- vis a contract of insurance qua contract.

x x x x This court in Oriental Insurance Co. Ltd. v. Inderjit Kaur, 1998 ACJ 123 (SC), held that once a certificate of insurance is issued, the insurance company would not be absolved of its obligations to third parties Yet again in Deddappa v. Branch Manager, National Insurance Co. Ltd., 2008 ACJ 581 (SC), having regard to the provisions contained in Section 64-VB of the Insurance Act, 1938, in the fact situation obtaining therein, it was opined:

"(22) A contract is based on reciprocal promise. Reciprocal promises by the parties are condition precedents for a valid contract. A contract furthermore must be for consideration."

19. We, therefore, in the facts and circumstances of the case, are unable to agree

with the contention of the learned Counsel for the appellant."

17. In the instant case, there is not even a whisper that the cover

note issued by the Insurance Company was cancelled at any point of

time. It thus stands established on record that till the time of deposit

of the premium of insurance in cash by the insured, the cover note

was valid and had not been cancelled. The accident had thus taken

place during the period of validity of the cover note. In view of the

aforesaid settled legal position, therefore, in my opinion, the

Insurance Company cannot be allowed to escape its liability of

payment of compensation to the appellants, the appellants being third

parties to the contract of insurance.

18. Adverting next to the aspect of enhancement of compensation,

Mr. Mannie, the learned counsel for the appellants contended that the

compensation awarded to the appellants was very niggardly, and that

in law the appellants were entitled to much more compensation than

had been awarded to them. He pointed out that the undisputed facts

were that the monthly income of the deceased, who was an Assistant

Sub-Inspector in the Delhi Police, was ` 2,492/- per month at the time

of his death, which took place when the deceased was 43 years of age,

the date of birth of the deceased being 03.07.1946. Indisputably also,

the deceased at the time of his death left behind him his widow (the

appellant No.1), his mother (the appellant No.2, who had since

expired resulting in the deletion of her name from the array of

parties), and two sons (the appellants No.3 and 4). The learned

Tribunal, while assessing the income of the deceased for the purpose

of computing the loss of dependency of his legal representatives, not

only did not take into account the future prospects of increase in the

income of the deceased who was in a stable Government job, but also

deducted one-third (1/3rd) of the earnings of the deceased on the

assumption that the deceased would have spent one-third (1/3rd) of his

income on himself. The deceased at the time of his death was

survived by four dependent family members and in view thereof, the

learned Tribunal ought not to have deducted more than one-fourth

(1/4th) of his income towards his personal expenses and maintenance,

leaving the balance three-fourth (3/4th) for the remaining four

members of his family who were dependent upon him.

19. Mr. Mannie also contended that the multiplier adopted by the

Tribunal for augmenting the multiplicand constituting the loss of

dependency of the appellants was the multiplier of 12, whereas the

age of the deceased justified the application of the multiplier of 14

instead of the multiplier of 12. Lastly, it was contended on behalf of

the appellants that a very meagre amount of non-pecuniary damages

were awarded to the appellants by the learned tribunal being in the

sum of ` 2,000/- for loss of consortium and ` 2,000/- towards the

funeral expenses of the deceased.

20. Ms. Manjusha Wadhwa, the learned counsel for the Insurance

Company on the aspect of loss of dependency of the appellants, did

not dispute the earnings of the deceased or the age of the deceased.

She, however, submitted that the non-pecuniary damages to the legal

representatives of the deceased ought not to have been enhanced by

this Court by its order dated 01.07.2008 to the sum of ` 95,000/-. As

regards the interest on the award amount, it was her submission that

the same should be scaled down from 9% to 7% per annum from the

date of the filing of the petition till the date of realisation, including

the interest on the enhanced amount, if any.

21. After hearing the parties, I am of the view that the amount of

loss of dependency of the appellants needs to be re-computed keeping

in view the guidelines laid down by the Supreme Court from time to

time and it is upon this exercise that I now proceed to embark. The

undisputed income of the deceased was in the sum of ` 2,492/- per

month, which, for the sake of convenience, is rounded off to ` 2,500/-

per month. The deceased, who was an Assistant Sub-Inspector at the

age of 43 years, had he not died in the accident would have, most

certainly, made advancement in his future career, and his future

prospects therefore need to be taken into account for the purpose of

ascertaining his average annual income. In the case of Smt. Sarla

Verma and Ors. vs. Delhi Transport Corporation and Anr. (2009) 6

SCC 121, the Supreme Court has laid down as a rule of thumb that

where the deceased is in a stable job at the time of his accident, and is

in the age group of persons between 40 to 50 years, a 30% increase

must be made to his income at the time of his demise. Adding 30% to

the income of the deceased towards his future prospects, the average

monthly income of the deceased thus works out to ` 3,250/- [that is, `

2,500/- per month (income on the date of the accident) plus ` 750/-

per month (30% increase) = ` 3,250/- per month]. The annual

income of the deceased accordingly comes to ` 39,000/- per annum.

22. In view of the fact that the deceased was survived by four

dependent family members, there is substance in the contention of

Mr. Mannie that a deduction of not more than one-fourth (1/4th) from

the income of the deceased would be justified towards his personal

expenses. This is also in consonance with the judgment of the

Supreme Court in the case of Sarla Verma (supra). Thus calculated,

the average annual loss of dependency of the appellants works out to

` 29,250/- per annum.

23. As regards the multiplier to be adopted for augmenting the

aforesaid multiplicand also, I am inclined to agree with the learned

counsel for the appellants that the multiplier applicable to the instant

case would be the multiplier of 14, which has been held to be the

appropriate multiplier where the age of the deceased is between 41

years to 45 years. The said multiplier is also the multiplier approved

of by the Supreme Court in the cases of U.P. State Road Transport

Corporation and Ors. vs. Trilok Chandra & Ors., (1996) 4 SCC 362

and New India Assurance Co. Ltd. vs. Charlie and Anr., (2005) 10

SCC 720, and has been tabulated in the case of Sarla Verma (supra)

as the appropriate multiplier for the aforesaid age group of victims.

The multiplier in the second column in the table in the Second

Schedule to the Motor Vehicles Act is the multiplier of 15, but in

order to ensure uniformity in the application of multipliers and

computation of compensation, the multiplier of 14, as noted above,

has been approved by the Supreme Court. Adopting the said

multiplier, the total loss of dependency of the appellants comes to `

29,250/- x 14 = ` 4,09,500/- (Rupees Four Lakh Nine Thousand and

Five Hundred Only).

24. As regards the contention of the learned counsel for the

appellants with regard to the non-pecuniary damages and funeral

expenses of the deceased, I am inclined to agree with the counsel's

contention that the learned Tribunal has awarded a very meagre

amount of damages of ` 2,000/- each towards the loss of consortium

and funeral expenses of the deceased. It is accordingly deemed just

and fair to award an additional sum of ` 3,000/- each under the

aforesaid heads and a further sum of ` 5,000/- each towards the loss

of love and affection and loss of estate of the deceased. Thus, in all,

the compensation payable to the appellants by the Insurance

Company works out to ` 4,29,500/-, which is rounded off to `

4,30,000/- (Rupees Four Lakh Thirty Thousand Only).

25. As regards the issue of interest that the rate of interest of 9%

per annum awarded by the learned Tribunal is on the lower side and

the same should be enhanced to 18% per annum, it needs to be borne

in mind that interest is compensation for forbearance or detention of

money, and is awarded to a party for being deprived of the money

which ought to have been paid to it. Courts have awarded interest as

deemed just and fair keeping in view a number of factors including

economic conditions, inflationary trends, the policy laid down by the

Reserve Bank of India from time to time and the conduct of the

parties to the litigation. In the instant case, the Tribunal has awarded

interest at the rate of 9% per annum and I see no reason to interfere

with the aforesaid rate of interest. Accordingly, the grant of interest

at the rate of 9% per annum on the award amount from the date of

filing of the petition, that is, 15.01.1990 till realisation is affirmed.

On the enhanced amount, however, interest shall be paid at the rate of

7.5% per annum for the aforesaid period.

26. In view of the aforesaid, the total compensation is enhanced

from ` 2,43,184/- to ` 4,30,000/- (inclusive of the interim award)

with interest at the rate of 7.5% per annum on the enhanced amount

from the date of the filing of the petition till the date of payment.

Interest at the rate of 9% per annum as awarded by the Tribunal shall

be paid on the original award amount for the aforesaid period. The

entire amount of compensation shall be paid to the appellants by the

Insurance Company within 30 days of the date of the passing of this

order.

27. As regards the apportionment of the award amount, 50% of the

award amount shall enure to the benefit of the appellant No.1, the

widow of the deceased, while the remaining 50% shall be equally

disbursed to the appellants No.3 and 4. Since the accident took place

way back in the year 1989, the entire award amount payable to all the

appellants shall be released to them.

28. The appeal is allowed in the above terms.

REVA KHETRAPAL (JUDGE) August 16, 2011 km